He said Facebook-backed Diem cryptocurrency project: It is withdrawing its application for a Swiss payment license and is moving its operations instead to the United States.
The Diem association, which oversees the development of the Diem cryptocurrency, was seeking a payment system license with the Swiss watchdog, FINMA.
Diem has now dropped its plans to secure Swiss regulatory approval, while its subsidiary is in the United States I entered It’s partnered with Silvergate, a California charter bank, to issue the token.
Stuart Levy, CEO of Diem, said in a statement: While our plans take the project entirely within the regulatory periphery of the United States and no longer require a license from FINMA, the project has benefited greatly from the extensive licensing process in Switzerland, constructive comments from FINMA and more. Twenty other regulatory bodies from around the world.
Diem said it plans to move its headquarters from Geneva to Washington, DC, where its US unit is based.
After the announcement, FINMA said: Diem’s request for a Swiss license was in the advanced stage, but the group is now planning to launch its payment system from the United States.
Facebook’s vision of the digital currency was formerly known as Libra, and it met with a backlash from regulators when it was first announced in June 2019.
Central bankers and politicians were concerned that Facebook’s digital currency could undermine sovereign currencies like the dollar, enable money laundering and violate users’ privacy.
The Facebook-backed organization has since lost several major supporters, including Visa, MasterCard and PayPal.
Diem initially proposed a global currency linked to a basket of major currencies, and after much regulatory opposition, the group shifted its focus to several stablecoins backed by different currencies, in addition to one multi-currency coin.
Diem is currently planning to issue a stable currency backed only by the US dollar, called Diem USD.
And unlike Bitcoin, which uses blockchain technology and is not controlled by any single authority, Diem technology will only be available to a small number of participants, such as Facebook and other members of the Diem Association.
And stablecoins are also designed to avoid the noticeable price volatility in cryptocurrencies like Bitcoin.
Silvergate is the exclusive issuer of Diem USD and manages the Diem USD reserve in dollars, as it has become an ideal destination for cryptocurrency companies that traditional lenders shun.
Diem is preparing to launch a pilot program using its stable currency pegged to the dollar later this year. The pilot program will be small and focus largely on transactions between individual consumers.
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